When it seems like customers are abandoning your business for a competitor, it’s tempting to respond by slashing prices and offering deep discounts. However, while that may win you back market share in the short term, it’s not a long-term solution. Reducing prices may inadvertently start a price war, which could be bad for everyone. If you find you’re losing customers, here’s what to do to assess and remedy the situation.
1 – Diagnose the problem
The first step is to try to pinpoint why customers prefer a competitor’s business over yours. This requires internal reflection and competitive analysis.
Start with a competitive analysis to understand what others in your market are offering. Learn about their marketing campaigns, pricing models, customer service, loyalty programs and product features. This information provides a baseline with which to compare your company’s customer experience.
Next, dive into your own company information. Use your sales, CRM, and marketing data to find trends and patterns in customer behavior. Send surveys at different points in the customer journey to learn what’s working and what isn’t. Ask questions about your customer service, website experience, product benefits, returns policy, and any other aspect of the customer experience that might be relevant. Try to gauge if there’s a specific moment when customers are deciding to switch to a different brand.
2 – Determine who your best customers are
Your best customers may not be who you think they are. “Great customers often fly under the radar because they quietly make big purchases and drive a substantial portion of your profits,” wrote BizJournals. “They may not even be your most frequent buyers. In fact, frequent customers often cost businesses money because they require discounts or other incentives to buy.”
A business’s definition of best customer depends on a few different factors, including your pricing model, product or service and business model. Determine who your most profitable existing customers are, and then dive deeper into your data to learn what makes these people stay loyal. You may decide to survey this audience segment more specifically to find out why they stay with your brand year after year.
3 – Put insights into action
Ideally, you’ll learn what your best customers love about your brand and be able to emphasize that in every customer’s experience to differentiate your business from your competitors. There are a few things you could do to keep your customers from abandoning ship:
Provide the best customer service
Research shows quality customer service is the biggest driver of customer retention – even more than product or price. Make sure everyone in your organization is trained to provide five-star service.
Update your product or service offering
Consider revamping your product or service to better meet customer needs or to provide a new benefit.
Invest in your brand
Advertising, marketing, and promotion are tried and true methods of regaining market share but will require finding the right message and medium to work.
Offer a loyalty discount
Encourage people to stay with your brand by offering discounts for loyal customers.
Each of these strategies has its pros and cons; therefore, it’s important to choose a path grounded in customer insight and competitive analysis.
4 – Build customer trust
Customers tend to stay with brands that provide education in addition to a product or service. “Educational resources can help your customers become more familiar with your processes, solutions and company. With better knowledge, they’re also more likely to upgrade to premium plans or stay longer,” wrote Copper, a CRM tool.
Use your social media and email list to provide resources and information unique to your space. How-to videos, infographics, and product comparison guides all help customers make decisions when shopping around. When customers see you as a source of knowledge, they build trust in your brand and are more likely to stay loyal over time.